So, you have benchmarked your employees’ salaries against the market and can now see exactly where each employee is, relative to that comparator population. What next?
As Plato said, “a good decision is based on knowledge and not on numbers”. The absolute nature of benchmarking needs careful application within your organisation, your strategy, your budget and so on. The results from your benchmarking exercise give you some context for your next decisions, but shouldn’t be the sole basis for decision making.
1. Reflect and review
Take your time with the results. You are no doubt excited about all the data and want to start saving the world straight away, but make sure you take your time digesting and reviewing the data. Rushing to make changes and put fixes in might make the situation worse or just move the problem to another area of the business.
2. Project objectives
Remind yourself what the original reason for reviewing the market was. Does the data do what you wanted it to do? If not, why? Has the right data source been used? Are the matches still relevant or has the business structure changed?
3. Legislation
What is happening with legislation and how will this impact your pay decisions? For example how would moving employees up to the National Living Wage impact on your benchmarking results? You might find that in doing so, your pay is now on par with the market and no longer of concern.
4. Equal pay
Has your analysis also looked at the impact of compulsory gender pay reporting? Consider this before and after any changes to employees’ salaries you might make. As with the National Living Wage, moving employees to resolve a gender pay discrepancy might also address a misalignment with the market.
5. Pay review
Use your benchmarking to inform any upcoming annual pay review discussions. Is this the year to do something different with annual pay reviews, now you know the areas of the business that are behind or ahead of the market? Would you negotiate any differently with your Unions now you have this data?
6. Analytics
The pay benchmarking data is a brilliant springboard for HR analytics. What data can you combine with the pay data to interrogate and challenge the business? For example, who has had a pay rise of more than 10% in the past year – are they your top talent? How leaky is your pay bucket? How much money is spent, throughout the year between pay reviews on ad-hoc, out of cycle increases?
7. Talent mapping
Is there a correlation between your pay benchmarking data and your talent mapping? Is your talent positioned where you want them to be in relation to the market? Your identified talent who are behind the market should be considered a ‘flight risk’, what should you do to keep them?
8. More than just pay
Benchmarking data providers will often also give you access to benefits information as well as pay data. It is important you understand how your total reward proposition compares to the market. You might find that you offer market leading benefits and therefore do not need to offer market leading pay as well.
Coming back to Plato’s point about knowledge, pay benchmarking is not simply about reacting to the market data - it is one lens on an employee’s reward. What you decide to do with these numbers relies on your knowledge of your employees, your business and your goals.
For help and advice with pay benchmarking, get in touch on 020 3457 0894 or contact us online.
